Government
Type: Republic.
Independence: 1821.
Constitution: The 1987 Sandinista-era constitution was amended in 1995 to provide for a more even distribution of power among the four branches of government and again in 2000 to increase the size of the Supreme Court and the Controller General's Office and to make changes to the electoral laws. The changes in 2000 allowed for the president to be elected with 35% of the popular vote so long as there was at least a five percentage point difference between the first and second place candidates in order to avoid a second round of voting.
Branches: Executive--president and vice president. Legislative--National Assembly (unicameral). Judicial--Supreme Court and subordinate appeals, district, and local courts, as well as separate labor and administrative tribunals. Electoral--Supreme Electoral Council, responsible for organizing and holding elections.
Administrative subdivisions: 15 departments and two autonomous regions on the Atlantic coast; 153 municipalities.
National political parties and leaders: Conservative Party or PC (Bolanos Davis); Independent Liberal Party or PLI (whose presidency is currently in dispute); Liberal Constitutionalist Party or PLC (Jorge Castillo-Quant); Nicaraguan Liberal Alliance or ALN (Alejandro Mejia-Ferreti); Sandinista National Liberation Front or FSLN (Daniel Ortega-Saavedra); Sandinista Renovation Movement or MRS (Enrique Saenz-Navarrete).
Suffrage: Universal at 16.

PEOPLE
Most Nicaraguans are of both European and indigenous ancestry, and the culture of the country reflects the mixed Ibero-European and indigenous heritage of its people. Only the indigenous of the eastern half of the country remain ethnically distinct and retain their tribal customs and languages. A large black minority, of Afro-Caribbean origin, is concentrated along the Caribbean coast. In the mid-1980s, the central government divided the eastern half of the country--the former department of Zelaya--into two autonomous regions and granted the people of the region limited self-rule under an elected regional council of 45 deputies and an indirectly-elected governor.

Roman Catholicism is the dominant religion, but Evangelical Protestantism has experienced rapid growth over the past 10 years. There are strong Anglican and Moravian communities on the Caribbean coast, and a small Muslim population exists in Managua and in the larger cities along the Pacific coast. Buddhist and Jewish communities are small. Most Nicaraguans live in the Pacific lowlands and the adjacent interior highlands. The population is 58% urban.

HISTORY
Nicaragua takes its name from Nicarao, chief of the indigenous tribe that lived around present-day Lake Nicaragua during the late 1400s and early 1500s. In 1524, Hernandez de Cordoba founded the first Spanish permanent settlements in the region, including two of Nicaragua's principal towns: Granada on Lake Nicaragua, and Leon, located west of Lake Managua. Nicaragua gained independence from Spain in 1821, briefly becoming a part of the Mexican Empire and then a member of a federation of independent Central American provinces. In 1838, Nicaragua became an independent republic.

Much of Nicaragua's political history since independence has been characterized by the rivalry between the Liberal elite of Leon and the Conservative elite of Granada, which frequently led to civil war. Initially invited by the Liberals in 1855 to join their struggle against the Conservatives, an American named William Walker and his "Filibusterers" seized the presidency in 1856. Walker’s troops and Nicaraguan troops fought a historic battle at San Jacinto hacienda on September 14, 1856, which is now celebrated as a national holiday. In 1857, the Liberals and Conservatives united to drive Walker out of office. Three decades of Conservative rule followed. In 1893, Jose Santos Zelaya took advantage of divisions within the Conservative ranks and led a Liberal revolt that carried him to power. Zelaya ended a longstanding dispute with Britain over the Atlantic coast in 1894, and formally reincorporated that region into Nicaragua, establishing Nicaragua’s present-day boundaries.

By 1909, political differences and rivalries again emerged over plans for a trans-isthmian canal and concessions granted to American investors in Nicaragua. In 1909 the United States provided political support to Conservative-led forces rebelling against President Zelaya and intervened militarily to protect American lives and property. With the exception of a 9-month period in 1925-26, the United States maintained troops in Nicaragua from 1912 until 1933. From 1927 until 1933, U.S. Marines stationed in Nicaragua engaged in an effort to capture rebel forces led by Augusto Sandino, a Liberal general who had rejected a 1927 negotiated agreement brokered by the United States to end the conflict between Liberals and Conservatives.

After the departure of U.S. troops in 1933, National Guard Commander Anastasio Somoza Garcia outmaneuvered his political opponents--including Sandino, who was assassinated by National Guard officers--and took over the presidency in 1936. Somoza and his two sons who succeeded him sought to maintain close ties with the United States. The Somoza dynasty, beset by corruption, ended in 1979 with a massive uprising led by the Sandinista National Liberation Front (FSLN), which had conducted a low-scale guerrilla war against the Somoza regime since the early 1960s.

Soon after taking power the FSLN pushed out rival factions and established an authoritarian dictatorship under leadership of Daniel Ortega. U.S.-Nicaraguan relations deteriorated rapidly as the regime nationalized many private industries, confiscated private property, supported Central American guerrilla movements, and maintained links to international terrorists, including the Colombian guerrilla group Revolutionary Armed Forces of Colombia (FARC), the Basque Homeland and Freedom (ETA) separatist group, and the Palestine Liberation Organization (PLO). The United States suspended aid to Nicaragua in 1981. Later the Ronald Reagan administration provided assistance to the Nicaraguan resistance (Contras) and in 1985 imposed an embargo on U.S.-Nicaraguan trade.

In response to both domestic and international pressure, Ortega’s Sandinista regime entered into negotiations with the Nicaraguan resistance leaders and ultimately agreed to nationwide elections in February 1990. In these elections, Nicaraguans elected as their President the National Opposition Union (UNO) candidate, Violeta Barrios de Chamorro, widow of the slain journalist and editor of the daily newspaper La Prensa, Pedro Joaquin Chamorro. She defeated Ortega, the Sandinista Party candidate.

During President Chamorro's nearly 7 years in office, her government achieved major progress toward consolidating democratic institutions, advancing national reconciliation, stabilizing the economy, privatizing state-owned enterprises, and reducing human rights violations. Despite a number of irregularities--which were due largely to logistical difficulties and a complicated electoral law--the October 20, 1996 presidential, legislative, and mayoral elections were judged free and fair by international observers and by the groundbreaking national electoral observer group Etica y Transparencia (Ethics and Transparency). This time Nicaraguans elected former Managua Mayor Arnoldo Aleman, leader of the center-right Liberal Alliance. Aleman defeated Sandinista Party candidate Daniel Ortega.

The first transfer of power in modern Nicaraguan history from one democratically-elected president to another took place on January 10, 1997, when the Aleman government was inaugurated. Aleman’s administration was marred by graft and corruption. At the end of his term, Aleman entered into a political pact (el Pacto) with Daniel Ortega to divide control of state institutions between them and perpetuate themselves in power.

Nicaragua held presidential and legislative elections in November 2001. Enrique Bolanos of the Liberal Constitutional Party was elected to the Nicaraguan presidency on November 4, 2001, defeating Sandinista candidate Daniel Ortega by 14 percentage points. President Bolanos was inaugurated on January 10, 2002. His administration sought to deliver on campaign promises to reinvigorate the economy, create jobs, fight corruption, and support efforts against terrorism. However, political attacks from both the left and the right severely blunted his administration’s efforts to shrink traditional sources and bases of political patronage and corruption.

FSLN candidate Daniel Ortega won the presidential elections of November 5, 2006, with 38% of the vote, defeating a divided opposition. ALN candidate Eduardo Montealegre garnered 29%; Jose Rizo of the PLC received 26%; and MRS' Edmundo Jarquin polled fourth with 6%. Ortega was inaugurated on January 10, 2007.

In early 2008, Eduardo Montealegre was forced out of the ALN and formed his own movement, Vamos con Eduardo (VCE), and ran for mayor of Managua. The VCE and PLC formed an electoral alliance to compete under the same banner during the November 2008 municipal elections. Those elections were marred by a number of serious irregularities and were universally denounced domestically and internationally as severely flawed. Official results released by the Supreme Electoral Council awarded 105 of Nicaragua’s 153 municipalities to the ruling FSLN. As a result of the electoral fraud, over $100 million in international assistance was lost beginning in 2009. A subsequent regional council election in March 2010 on Nicaragua’s Caribbean coast was also marred by election fraud that favored the FSLN.

GOVERNMENT AND POLITICAL CONDITIONS
Nicaragua is a constitutional democracy with executive, legislative, judicial, and electoral branches of government. In 1995, the executive and legislative branches negotiated a reform of the 1987 Sandinista constitution, which gave extensive new powers and independence to the legislature--the National Assembly--including permitting the Assembly to override a presidential veto with a simple majority vote and eliminating the president's ability to pocket-veto a bill.

Nicaragua's constitution guarantees freedom of speech, peaceful assembly and association, religion, and movement within the country, as well as foreign travel, emigration, and repatriation. In the run-up to the November 2008 municipal elections the government made attempts to limit some of these rights, including limiting free and open discussion in the media and academia, and peaceful assembly. The constitution prohibits discrimination based on birth, nationality, political belief, race, gender, language, religion, opinion, national origin, and economic or social condition. All public and private sector workers, except the military, public safety workers, and police, are entitled to form and join unions of their own choosing. Most of Nicaragua’s labor force is involved in the informal service and agricultural sectors and is not unionized. However, the formal manufacturing and government/public sectors are heavily unionized. About 65% of unions are affiliated with the Sandinistas. Workers have the right to strike. Collective bargaining is becoming more common in the private sector.

The president and the members of the unicameral National Assembly are elected to concurrent 5-year terms. The National Assembly consists of 92 total deputies (90 elected from party lists drawn at the regional and national levels, plus the outgoing president and the second place finisher in the most recent presidential election).

The Supreme Court supervises the functioning of the still largely ineffective, often partisan, and overburdened judicial system. In 2000, the Ortega-Aleman pact orchestrated expansion of the Supreme Court from 12 to 16 justices. The National Assembly elects Supreme Court justices to staggered 5-year terms. Led by a council of seven magistrates, the Supreme Electoral Council (CSE) is the co-equal branch of government responsible for organizing and conducting elections, plebiscites, and referendums. The National Assembly elects the CSE magistrates and their alternates to 5-year terms. A 2000 constitutional amendment expanded the number of CSE magistrates from five to seven and gave the PLC and the FSLN a freer hand to name party activists to the Council, prompting allegations that both parties were politicizing electoral institutions and processes and excluding smaller political parties.

The constitution provides the Assembly with sole power to elect Supreme Court judges, CSE magistrates, and other national level public officials. However, in January 2010 President Ortega issued a decree that indefinitely extended the terms of these incumbent officials. As a result, as of May 2010 about two dozen of these officials remained in their positions despite the fact that their terms had expired, including several Supreme Court judges. After Liberal judges boycotted the Supreme Court for several months, Ortega replaced them in August 2010 with five Sandinista and two Liberal justices.

Political Parties
The 2006 national elections resulted in the following distribution of the 92 seats in the National Assembly (installed January 9, 2007): FSLN--38; PLC--25; ALN--24; MRS--5. The political parties have since reorganized and the makeup of the Assembly is now FSLN--37; PLC--20; BDN--13; ALN--7; MRS--4; BUN--5; and Independent--6.

Nicaragua maintains an embassy in the United States at 1627 New Hampshire Avenue, NW, Washington, DC 20009 (tel. 202-939-6570). Nicaragua has consulates in Houston, Los Angeles, Miami, New York, and San Francisco. Contact information: http://www.state.gov/s/cpr/rls/fco/springsummer/91355.htm

ECONOMY
With a gross domestic product (GDP) of $6.2 billion and a per capita income of $1,071 in 2009, Nicaragua is the second-poorest country in the Western Hemisphere. The economy contracted by 1.5% in 2009, largely as a result of falling demand for Nicaraguan exports and decreased domestic investment. Official sources estimate GDP growth of 3%-4% for 2010, mainly due to an increase in commodity prices and Venezuelan-funded stimulus spending. Official unemployment in 2009 was 8%, but 65% of all workers earn a living in the informal sector, where underemployment is high. In 2009, Nicaraguans received $768 million in remittances from abroad, the majority from the United States. Total exports are equivalent to 39% of GDP.

Because Nicaragua has abundant arable land and water resources, agriculture will always be an important component of the economy. About a third of GDP is derived from agriculture, timber, and fishing. Opportunities exist in food and timber processing and preparation for export. Currently, most agriculture is small-scale and labor intensive. Livestock and dairy production have seen steady growth over the past decade and have taken the greatest advantage of free trade agreements. Many export products, especially coffee, have benefited from the recent rise in international commodity prices.

Social indicators for Nicaragua have improved since 1991. The current population of Nicaragua is 5.9 million; life expectancy at birth is 71.5 years. Prenatal care coverage has steadily improved and infant mortality has dropped from 52 deaths per 1,000 live births in 1991 to 25 per 1,000. The country has achieved 85% vaccination coverage, and since 2004, infectious disease has fallen from fourth to fifth place among the leading causes of death, with the number of such deaths down nearly 50% since 1996. In 2007, the Minister of Education reported school enrollment as 86.5%. Nicaragua's score on the United Nations Human Development Index rose by 25% from 1990 to 2010 (from 0.454 to 0.565). Despite these statistical gains, the benefits of economic development have been uneven. Blackouts, water shortages, and high energy prices disproportionately affect the poorest in the population. About 46% of the population lives on less than $1.15 a day.

President Ortega’s stated objective is to implement socialism in Nicaragua, which he further defines as a mixed economy, guided by Christian and socialist ideals. He has used funds provided by Venezuela through the Bolivarian Alliance for the Americas (ALBA) to increase the role of the FSLN party in the economy, including the purchase of a hotel, cattle ranch, television station, gasoline filling stations, construction equipment, and electricity generators. At the same time, President Ortega has maintained many of the legal and regulatory underpinnings of the market-based economic model of his predecessors, despite rhetoric decrying the "neo-liberal economic model," and along with it capitalism and the United States, which he refers to as the imperial power.

Nicaragua signed a 3-year Poverty Reduction and Growth Facility (PRGF) with the International Monetary Fund (IMF) in October 2007. As part of the IMF program, the Government of Nicaragua agreed to implement free market policies linked to targets on fiscal discipline, poverty spending, and energy regulation. The lack of transparency surrounding ALBA funds, channeled through state-run enterprises rather than the official budget, has become a serious issue for the IMF and international donors. In November 2010, the IMF approved a 1-year extension of the arrangement. The extension allows for the disbursement of the remaining $36 million dollars in 2011, but the program is contingent on the publication of additional information about off-budget expenditures.

Nicaragua has stayed current with the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR), which entered into force for Nicaragua on April 1, 2006. Nicaraguan exports to the United States, which account for two-thirds of Nicaragua’s total exports, were $1.6 billion in 2009, up 37% since 2005. Textiles and apparel account for about half of all exports to the United States, while automobile wiring harnesses add another 10%. Other leading export products are coffee, meat, cigars, sugar, ethanol, and fresh fruit and vegetables, all of which have seen remarkable growth since CAFTA-DR went into effect. U.S. exports to Nicaragua, meanwhile, were $680 million in 2009, up 15% from 2005.

Despite important protections for investment included in CAFTA-DR, the investment climate has steadily worsened since Ortega took office. President Ortega's decision to support radical regimes such as Iran and Cuba, his harsh rhetoric against the United States and capitalism, and his use of government institutions to persecute political enemies and their businesses have had a negative effect on perceptions of country risk. The government reported foreign investment inflows of $432 million in 2009, mostly in energy and telecommunications. There are over 100 companies operating in Nicaragua with some relation to a U.S. company, either as wholly or partly-owned subsidiaries, franchisees, or exclusive distributors of U.S. products. The largest are in energy, financial services, textiles/apparel, manufacturing, and fisheries.

Poor enforcement of property rights deters both foreign and domestic investment, especially in real estate development and tourism. Conflicting claims and weak enforcement of property rights has invited property disputes and litigation. The court system is widely believed to be corrupt and subject to political influence. Establishing verifiable title history is often entangled in legalities relating to the expropriation of 28,000 properties by the revolutionary government that Ortega led in the 1980s. Authorities seldom challenge illegal property seizures by private parties, occasionally undertaken in collaboration with corrupt municipal officials.

The U.S. Embassy's Economic and Commercial Section advances U.S. economic and business interests by briefing U.S. firms on opportunities and challenges to trade and investment in Nicaragua, encouraging key Nicaraguan decision makers to work with U.S. firms, helping to resolve problems that affect U.S. commercial interests, and working to change local economic and trade ground rules in order to afford U.S. firms a level playing field on which to compete. U.S. businesses may access key Embassy economic reports at http://nicaragua.usembassy.gov/econ.html.

FOREIGN RELATIONS
Nicaragua traditionally pursues an independent foreign policy. Since returning to power in 2007, Daniel Ortega has sought to build closer ties with Iran, Russia, and the ALBA states, especially Venezuela. Immediately after his inauguration Ortega formally joined ALBA. In 2008, Ortega made Nicaragua the second country (of only four) to grant diplomatic recognition to South Ossetia and Abkhazia, the breakaway “independent republics” of Georgia.

Nicaragua submitted three territorial disputes--one with Honduras, one with Costa Rica, and the other with Colombia--to the International Court at The Hague for resolution. The dispute with Honduras was resolved by The Hague in October 2007, and President Ortega and Honduran President Jose Manuel Zelaya Rosales met on October 8, 2007 to recognize the finality of the decision. Also in 2007, Nicaragua, Honduras, and El Salvador reached an agreement on fishing rights in the Gulf of Fonseca, though the actual border demarcation remains unresolved, by mutual agreement. In December 2007, The Hague issued an interim decision on the Colombia-Nicaragua dispute that granted sovereignty of the San Andres archipelago to Colombia, but urged both parties to work toward a mutually satisfactory resolution regarding the surrounding waters. As of mid-2010, no action had been taken toward that end.

Costa Rica and Nicaragua have long-disputed issues related to their boundary. An 1858 treaty fixed the boundary on the river’s southern bank, and a subsequent arbitration finding validated that treaty. A 2009 International Court of Justice (ICJ) decision also accepted the river’s southern bank as the boundary.

In October 2010, Costa Rica accused Nicaraguan troops of invading Costa Rican territory after Costa Rica protested Nicaragua’s dredging operations in the San Juan River, claiming that the dredging was causing irreparable environmental damage. The Permanent Council of the Organization of American States (OAS) and attendees of the Meeting of Consultation of the Ministers of Foreign Affairs of the OAS adopted separate resolutions to support OAS Secretary General’s recommendations, which included the removal of armed military and civilian security forces from the disputed area. Nicaragua claims its troops are on its soil, refused to remove them, and continued dredging operations. Costa Rica filed a provisional injunction with the International Court of Justice to be considered in January 2011.

At the 1994 Summit of the Americas, Nicaragua joined six Central American neighbors in signing the Alliance for Sustainable Development, known as the Conjunta Centroamerica-USA, or CONCAUSA, to promote sustainable economic development in the region.

Nicaragua belongs to the United Nations and several specialized and related agencies, including the World Bank, the International Monetary Fund (IMF), World Trade Organization (WTO), UN Educational, Scientific, and Cultural Organization (UNESCO), World Health Organization (WHO), Food and Agriculture Organization (FAO), International Labor Organization (ILO), and UN Human Rights Commission (UNHRC). Nicaragua also is a member of the Organization of American States (OAS), the Pan-American Health Organization (PAHO), the International Civil Aviation Organization (ICAO), the Central American Armed Forces Conference (CFAC), the Non-aligned Movement (NAM), the International Atomic Energy Commission (IAEA), the Inter-American Development Bank (IDB), and the Central American Bank for Economic Integration (CABEI).

U.S.-NICARAGUAN RELATIONS
U.S. policy supports the preservation of the democratic process initiated in Nicaragua with the 1990 election of President Chamorro. The United States has promoted national reconciliation, encouraging Nicaraguans to resolve their problems through dialogue and compromise. It recognizes as legitimate all political forces that abide by the democratic process and eschew violence. U.S. assistance is focused on strengthening democratic institutions, stimulating sustainable economic growth, and supporting the health and basic education sectors.

Section 527 of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995, prohibits U.S. assistance and support to any country in which U.S. citizens have not received adequate and effective compensation for outstanding claims against the government for confiscated property, as is the case in Nicaragua. The law provides authority to the President, which is delegated to the Secretary of State, to waive the prohibition when it is in the national interest. In 2010, the Secretary issued the 17th waiver of the Section 527 prohibition based upon Nicaragua's progress in resolving U.S. citizen claims.

Since 1990, the United States has provided over $2 billion in assistance to Nicaragua. About $489 million of that was for debt relief, and another $488 million was for balance-of-payments support. The United States also provided $94 million in 1999, 2000, and 2001 as part of its overall response to Hurricane Mitch. In response to Hurricane Felix, the United States provided over $15 million in direct aid to Nicaragua to support humanitarian relief and recovery operations from the damage inflicted in September 2007. Aside from funding for Hurricanes Mitch and Felix, the levels of assistance have fallen incrementally to reflect the improvements in Nicaragua. Assistance has been focused on promoting more citizen political participation, compromise, and government transparency; stimulating sustainable growth and income; and fostering better-educated and healthier families.

The Millennium Challenge Corporation's (MCC) 5-year, $175 million compact with the Republic of Nicaragua entered into force on May 26, 2006. The Millennium Challenge Compact sought to reduce poverty and spur economic growth by funding projects in the regions of Leon and Chinandega aimed at reducing transportation costs and improving access to markets for rural communities; increasing wages and profits from farming and related enterprises in the region; and attracting investment by strengthening property rights. In June 2009, the MCC Board terminated portions of the compact when the Government of Nicaragua refused to address credible accusations of fraud related to the November 2008 municipal elections.

The U.S. Embassy in Nicaragua is located at Kilometer 5.5, Carretera Sur, Managua (tel. country code 505, phone 2252-7100). Letters to the Embassy mailed in the U.S. should be addressed to American Embassy Managua, DPO AA 34021. Regular hours of operation are M-F from 7:15 a.m. to 4:30 p.m. local time. Embassy Managua maintains a Facebook page.

Other Information
The World Factbook provides profiles on the history, people, government, economy, geography, communications, transportation, military, and transnational issues for over 266 countries and territories around the world.

The Department of State submits an annual Human Rights reports for most countries. The report covers civil, political, and workers’ rights as outlined in the Universal Declaration of Human Rights. See the 2009 Human Rights Report for Nicaragua.

The International Narcotics Control Strategy Report (INCSR) is an annual report issued by the Bureau of International Narcotics and Law Enforcement Affairs that covers the efforts of key countries to combat international drug trafficking. See the 2010 INCSR Report for Nicaragua.